Saturday, July 7, 2012

Article Review Essay

Article Review Essay

In the artcile reviewed, Sassen assesses the ‘informal economic activities’ conduxcted by immigrants and suggests that that the profits and costs of informal activity do not only depend on the opportunity structure, but also on the characteristics of the (informal) entrepreneur, and their interrelationship.(Sassen, 1988) Just like in the formal economy, entrepreneurs have to be capable of identifying the opportunities for informal production and, of course, of seizing them. This is contingent on the economic, human and social capital of the entrepreneur. Micro-entrepreneurs often lack the money to hire adroit lawyers or financial advisers, so they have to do the bookkeeping themselves. This mostly narrows the scope of creative bookkeeping and increases the risk of mistakes. In any case, their books tend to attract the attention of the tax service. This is particularly true for immigrants who are then faced with higher risks. (Sassen, 1988)

Owing to their lack of educational qualifications but also owing to the biased, if not overtly racist, recruitment procedures of native employers, the immigrants’ position on the formal labour market is rather weak. Sassen states that “this blocked mobility constitutes an important reason why immigrants enter self-employment but is not without pitfalls as this same lack of skills and qualifications may also hamper entrepreneurship in highly regulated markets.” (Sassen, 1988) In many sectors, entrepreneurs need to have a permit. Starting a butcher’s shop or a bakery in the Netherlands, for instance, requires a permit. These permits are given only if the entrepreneur can show his professional credentials that have to be obtained in specific vocational training programmes. Immigrants, being unaware of many of these rules and regulations, sometimes miscalculate the costs and profits of informal activities (Sassen, 1988).

According to sassen, “informal production, finally, is also related to the social capital of the people involved.” (Sassen, 1988) Informal production implies that one cannot call upon the regular institutions in case of disagreements. Informal economic activities, hence, have to take place within frameworks of trust. This trust can be generated by social networks, which enable the informal provision of labour, capital, information and other resources. Thus, social networks will also contribute to a lowering of the chance of being caught. (Sassen, 1988)

The potential supply of immigrant labor is determined by the size of the relevant population, its resources and its proclivity for entrepreneurship. As for the latter, “some immigrants entered the country with the sole purpose of establishing themselves as entrepreneurs.” (Sassen, 1988) Many immigrants, however, did not settle with that purpose. Various immigrant groups show different levels of economic, human and social capital and (thus) different rates of self-employment. Their spatial concentration in specific cities and within those cities in specific neighbourhoods affect those rates as the very existence of immigrant communities themselves generate a demand for `ethnic’ products as well as a demand for `non-ethnic’ products produced by co-ethnics. () The final point sassen makes is that “the lack of opportunities outside their own enterprise in combination with their specific social embeddedness provides them with the entrepreneurial drive to stretch the rules.” (Sassen, 1988)

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